THE GOLD CONSPIRACY.
“Black Friday,” that darkest day in the financial history of America,
was not the creation of sudden circumstance, but the culmination of
a plan conceived by Gould and his associates, with all its details
arranged for weeks before. Whether the whole truth has ever been
written about Mr. Gould’s gold operations is open to doubt. The
explanation given by Henry Clews, in his noted work, “Twenty-eight
years in Wall Street,” seems a trifle naive to those who are not so
deeply initiated in Wall street methods. He says:
“In the year 1869, this country was blest with abundant crops far in
excess of our needs, and it was apparent that great good would result
from any method that could be devised to stimulate exports of a part,
at least, of the surplus.
“Letters poured into Washington by the thousand from leading bankers,
merchants and business men, urging that the Treasury department abstain
from selling gold, as had been the practice for some time, so that the
premium might, as it otherwise would not, advance to a figure that
would send our products out of the country, as the cheapest exportable
material in place of coin, which, at its then artificially depressed
price, was the cheapest of our products, and at the same time the only
one undesirable to part with. So the government decided to suspend gold
sales indefinitely.
“Jay Gould and others, being satisfied that this was to be the policy
of the administration, commenced at once buying large amounts of gold,
actuated, doubtless, by the purest of patriotic motives, namely, to
stimulate cotton and cereal exports. They succeeded in accumulating a
considerable amount of gold at prices ranging from 135 to 140, covering
a period of three months’ steady buying.
“This was the honest foundation on which the great ‘Black Friday’
speculative deal was erected.
“The eruption on ‘Black Friday’ was really caused by the erratic
conduct of James Fisk, Jr., who actively joined the movement on
Thursday, the day before, and became wild with enthusiasm on the
subject of high gold.”
[Illustration: The Men of Black Friday.
1.--JAY GOULD. 2.--JIM FISK, JR. 3.--DANIEL DREW. 4.--COMMODORE
VANDERBILT. 5.--PETER B. SWEENY. 6.--E. R. STOKES.]
The “Black Friday” scheme was the most gigantic one that Wall street
had ever seen. This gold conspiracy was investigated in 1870 by a
committee of Congress, of which James A. Garfield, afterward President,
was chairman, and S. S. Cox, a member. The investigation undertaken
went far enough to show how zealously the conspirators labored to
get Grant within their toils and implicated persons near to him.
Unfortunately, too, the President had innocently enough permitted
himself to be put in a suspicious position, and it was long before he
was completely purged of the scandal.
The report of the committee, with the accompanying testimony, is
absorbingly interesting:
“Gould, the guilty plotter of all these criminal proceedings,” is the
language of James A. Garfield, the author of this report.
Gould some years before had formed a co-partnership with H. N. Smith
and others under the name of Smith, Gould, Martin & Co. “He was a
broker,” says Henry Adams in his history of the gold conspiracy, “and a
broker is almost by nature a gambler, perhaps the very last profession
suitable for a railway manager. In character he was strongly marked
by his disposition for silent intrigue. He preferred, as a rule, to
operate on his own account without admitting other persons into his
confidence, and he seemed never to be satisfied except when deceiving
everyone as to his intentions. There was a reminiscence of the spider
in his nature. He spun huge webs in corners and in the dark, which
were seldom strong enough to resist a serious strain at the critical
moment. His disposition to this subtlety and elaboration of intrigue
was irresistible. It is scarcely necessary to say that he had not a
conception of a moral principle. In speaking of this class of men, it
must be fairly assumed at the outset that they do not, and can not,
understand how there can be a distinction between right and wrong in
matters of speculation, so long as the daily settlements are punctually
effected. In this respect, Mr. Gould was probably as honest as the mass
of his fellows, according to the moral standard of the street; but
without entering upon technical questions of roguery, it is enough to
say that he was an uncommonly fine and unscrupulous intriguer, skilled
in all the processes of stock gambling, and indifferent to the praise
or censure of society.”
It was one of Mr. Gould’s peculiarities that he rarely entered into any
large speculation without furnishing the public with a plausible reason
for assisting him in his operations. This was certainly the case in
the gold conspiracy. The plausible reason was in this case suggested
to Mr. Gould by James McHenry, who was then training with Mr. Gould in
Erie. The latter spared no pains to dress the reason up in the best
shape and give it to the public. Mr. Gould argued with much apparent
force, but actual sophistry, that an advance in the price of gold would
benefit the Western farmers in giving them a bigger price for their
grain, and Mr. Gould backed up this theory with many facts and figures.
Gen. Grant had just become President. His Secretary of the Treasury was
George F. Boutwell. The key to the situation was the financial policy
of the government. No successful corner in gold could be established
if the Treasury should sell gold with a liberal hand. It should be
explained that the war had caused a lively speculation in gold, which
continued after the war until the resumption of specie payments made
the greenbacks equal in value to gold. Speculation in gold was carried
on in the gold-room, an institution separate from the Stock Exchange.
It became essential to the success of Mr. Gould’s plans that the Grant
administration should either become a party to the speculation or else
an honest believer in his crop theory. Failing in both of these, the
public must at least be impressed with the idea that the administration
was in the deal whether it was or not. So Gould began to lay systematic
siege around the administration. He seems to have entered alone into
this speculation. It was only when he was unable to carry the burden
alone that he took in others, and it was not until late in the game
that Fisk entered, Gould found a brother-in-law of President Grant a
convenient tool in his operations. The name of this brother-in-law was
A. R. Corbin, who had been something of an adventurer all his life,
and whose chief hold on respectability was his relationship to the
President. Gould unfolded enough of his plans to Corbin to enlist him
in his service and to bind him by interest to the speculation. Gould
bought for Corbin $1,500,000 of gold, and promised him that all the
profits should be turned over to him. Every rise of one per cent. in
the price of gold made Corbin $15,000 richer. Corbin claimed to have
great influence with the President, and Gould evidently placed much
reliance in him. “I am right behind the throne,” said Corbin to Gould
at one stage of the proceedings. “Give yourself no uneasiness. All is
right.”
Mr. Henry Adams, in his celebrated chapter, “The New York Gold
Conspiracy,” makes the following interesting explanation of
circumstances preliminary to “Black Friday:” “In order to explain
the operation of a so-called corner in gold to ordinary readers with
the least possible use of slang or technical phrases, two preliminary
statements are necessary. In the first place, it must be understood
that the supply of gold immediately available for transfers is limited
within distinct bonds in America. New York and the country behind it
contain an amount usually estimated at about $20,000,000. The national
government commonly holds from $75,000,000 to $100,000,000, which may
be thrown bodily on the market if the President orders it. To obtain
gold from Europe, or other sources, requires time.
“In the second place, gold in America is a commodity bought and sold
like stocks. In gold, as in stocks, the transactions are both real
and speculative. The real transactions are mostly purchases or loans
made by importers who require coin to pay custom on their imports.
The speculative transactions are mere wagers on the rise or fall of
price, and neither require any actual transfer of gold, or even imply
its existence, although in times of excitement hundreds of millions
nominally are bought, sold and loaned.
“Under the late administration, Mr. McCulloch, then Secretary of the
Treasury, had thought it his duty at least to guarantee a stable
currency, although Congress forbade him to restore the gold standard.
During four years gold had fluctuated little and principally from
natural causes, and the danger of attempting to create an artificial
scarcity in it had prevented the operators from trying an experiment
which would have been sure to irritate the government. The financial
policy of the new administration was not so definitely fixed, and the
success of the speculation would depend on the action of Mr. Boutwell,
the new secretary, whose direction was understood to have begun by a
marked censure on the course pursued by his predecessor.
“Of all financial operations, cornering gold is the most brilliant and
the most dangerous, and possibly the very hazard and splendor of the
attempt were the reasons of its fascination to Mr. Jay Gould’s fancy.
He dwelt upon it for months and played with it like a pet toy. His
fertile mind even went so far as to discover that it would prove a
blessing to the community, and on this ingenious theory, half honest
and half fraudulent, he stretched the widely extended fabric of the
web in which all mankind was to be caught. This theory was in itself
partially sound. Starting from the principle that the price of grain
in New York is regulated by the price in London, and is not effected
by currency fluctuations, Mr. Gould argued that if it were possible
to raise the premium on gold from 30 to 40 cents at harvest time,
the farmer’s grain would be worth $1.40 instead of $1.30, and as a
consequence the farmer would hasten to send all his crop to New-York
for export over the Erie railway, which was sorely in need of freight.
With the assistance of another gentleman, Mr. Gould calculated the
exact premium at which the western farmer would consent to dispose
of his grain, and thus distance the three hundred sail which were
hastening from the Danube to supply the English market. Gold, which was
then heavy at 34, must be raised to 45.
“This clever idea, like all the other ideas of these gentlemen of Erie,
seems to have had the single fault of requiring that some one somewhere
should be swindled. The scheme was probably feasible; but sooner or
later the reaction from such an artificial stimulant must have come,
and whenever it came, some one must suffer. Nevertheless, Mr. Gould
probably argued that so long as the farmer got his money, the Erie
railway its freights, and he himself his small profits on the gold he
bought, it was of little consequence who else might be injured; and
indeed by the time the reaction came, and gold was ready to fall as
he expected, Mr. Gould would probably have been ready to assist the
process by speculative sales in order to enable the Western farmer to
buy his spring goods cheap, as he had sold his autumn crops dear. He
himself was equally ready to buy gold cheap and sell it dear on his
private account, and as he proposed to bleed New York merchants for the
benefit of the Western farmer, so he was willing to bleed Broad street
for his own. The patriotic object was, however, the one which, for
obvious reasons, Mr. Gould preferred to put forward most prominently
and on the strength of which he hoped to rest his ambitious structure
of intrigue.”
Here is the story in brief: In March, 1869, the price of gold touched
130¼, which was the lowest figure that it had reached in three years.
Jay Gould, as president of the Erie railway and the principal owner of
the Tenth National Bank, had the command of large sums of money. He
proposed to Fisk that they take advantage of the low price of gold and
“corner” it. Fisk did not think the scheme practicable, and declined
at first to go in. Subsequently he reconsidered his determination and
joined in the undertaking zealously. Gould bought $7,000,000 of gold
at 132 and put up the price to 140. He induced other brokers to buy
heavily, and within a few days gold advanced to 144. It soon dropped
back to 136. The element of uncertainty in Mr. Gould’s plan was the
policy of the government with reference to gold sales. Should the
government at any time release some of the millions stored in the
Sub-Treasury here, no “corner” could be successful.
The first step in the conspiracy after the bribing of Corbin and the
purchase of a large quantity of gold was to secure the appointment
of the right sort of man as Assistant Treasurer at New York. Though
nominally a subordinate officer and having no original authority,
the assistant treasurer draws the salary of a cabinet officer, and
his influence is large. Corbin undertook this part of the scheme
and secured the appointment of Gen. Butterworth, who seemed to give
great satisfaction to Gould. Butterworth was afterward exonerated by
Congress of all guilty connection with the gold conspiracy, but Gould
purchased for his account $1,000,000 of gold. But then Gould also had
the effrontery at one stage of the negotiations to buy $500,000 of
gold for Gen. Porter, the President’s private secretary, which that
gentleman promptly declined. It was said, also, that $500,000 was
purchased in the name of Mrs. Grant, but she never received any of the
profits and had no connection with the conspiracy.
Butterworth secured, it was necessary to make an impression on the
President. Says Mr. Adams: “On the 15th of June, 1869, the President
came to New York, and was there the guest of Mr. Corbin, who urged
Mr. Gould to call and pay his respects to the chief magistrate. Mr.
Gould had probably aimed at precisely this result. He called, and the
President of the United States not only listened to the president of
Erie, but accepted an invitation to Mr. Fisk’s theatre, sat in Mr.
Fisk’s private box, and the next evening became the guest of these two
gentlemen on their magnificent Newport steamer.”
The President was to be sounded in regard to his financial policy on
the occasion of this memorable trip to Boston, and when the selected
guests sat down at nine o’clock to supper the conversation was directed
to the subject of finance. “Some one,” says Mr. Gould, “asked the
President what his view was.” The “some one” in question was, of
course, Mr. Fisk, who alone had the impudence to put such an inquiry.
The President bluntly replied that there was a certain amount of
fictitiousness about the prosperity of the country, and that the bubble
might as well be tapped in one way as another. The remark was fatal to
Mr. Gould’s plans and he felt it, in his own words, “as a wet blanket.”
Mr. Fisk, in his testimony, frankly said:
“On our passage over to Boston with Gen. Grant we endeavored to
ascertain what his position in regard to finances was. We went down to
dinner about nine o’clock, intending, while we were there, to have this
thing pretty thoroughly talked up, and, if possible, to relieve him
from any idea of putting the price of gold down.”
Mr. Gould in his testimony said of the President: “He was our guest. At
this supper the question came up about the state of the country, the
crops, and the prospects ahead. The President was a listener; the other
gentlemen were discussing. Some were in favor of Boutwell’s selling
gold, and some were opposed to it. After they had all interchanged
their views, some one asked the President what his view was. He
remarked that he thought there was a certain amount of fictitiousness
about the prosperity of the country, and that the bubble might as well
be tapped in one way as another. That was about the substance of his
remark. He then asked me what I thought about it. I remarked that I
thought if that policy was carried out it would produce great distress,
and almost lead to civil war.”
However, Gould was already in, and he was not a man to back out as long
as he saw any chance for success, and he finally succeeded in really
impressing on the President’s mind that in order to move the crops it
was necessary that gold should sell at 145. Gould’s first purchases
had been made as low as 130¼, which was about the normal price.
But it should be said at the outset that there is not a particle
of evidence that Gen. Grant was ever personally concerned in the
speculation or that he winked at members of his official household
being so. On the contrary, the evidence is all the other way. Grant
never seemed to like Gould. When the latter succeeded in getting his
first interview with the President, Gen. Grant reprimanded his servant
for allowing him so easy an access to his person, and at a later day
the President remarked to his Secretary that he did not like to have
that man--referring to Gould--around so much. “He is always trying to
get something out of me,” was the President’s remark.
After the party returned to New York, Gen. Grant, Mr. Gould and Mr.
Corbin had private interviews on the gold question at Mr. Corbin’s
house. As a result of these interviews, according to Mr. Gould’s
testimony, the President remarked that the government would do nothing
during the fall months to put down the price of gold or to make money
tight. Just after those interviews Mr. Gould purchased two millions
in government bonds for Mr. Corbin’s account. The next interview with
President Grant on this great subject was at Newport, where James Fisk,
Jr., followed him.
Fisk testified that Corbin told him that Mrs. Grant had an interest
in the gold speculations; that five hundred thousand of gold had been
taken by Mr. Gould at 131 and 132, which had been sold at 137; that
Mr. Corbin held for himself about two millions of gold, five hundred
thousand of which was for Mrs. Grant and five hundred thousand for
“Porter.”
The story of the conspiracy, as Mr. Clews tells it, is interesting as
well, and has certain points of difference from the others. He says:
“Although the policy of stopping the sale of gold had been agreed
upon in deference to the views of the best financiers of the country,
yet Mr. Gould and his fellow strategists thought it was best to make
assurance doubly sure on this point, in order that nothing might stand
in the way of the great speculative intrigue to get a “corner” in gold.
President Grant was conservative on the subject. The conspirators,
therefore, conceived the design of arranging things so that Secretary
Boutwell could not depart from this policy, no matter what emergency
might arise.
“This bold and wicked strategy could only be successful by first
getting President Grant convinced that the theory of stopping the gold
sales was the only commercial salvation for the country, in the then
condition of business stagnation and the possible panic threatened. The
theory was then to impress him with the necessity of giving Secretary
Boutwell an absolute order not to sell gold, and afterward to fix
things so that it would be impossible for the President to revoke
that order until the brilliant speculative purposes of the clique in
cornering gold should be accomplished.
“The scheme was but little short of treason, regarded from a patriotic
point of view, and it is very questionable if the perpetrators would
have stopped short of this dastardly act had they not been convinced
that their purpose was fully compassed by a method less villianous and
shocking. It was considered indispensable by the conspirators for the
consummation of their plans that Grant should be got out of the way
by some means or other. Fortunately for him and for the honor of the
nation, the plan succeeded without the necessity of offering him any
violence.
“It was arranged that Gen. Grant should accompany a party one beautiful
evening in the middle of June, who were going to attend the great
Peace Jubilee of Patrick Sarsfield Gilmore in Boston. Jim Fisk did the
executive work in the arrangement. There was a fine champagne supper
on board the Boston boat and several gentlemen were present who were
thoroughly conversant with financial question’s and could talk glibly
on the state of the country. Mr. Gould said, in his testimony: ‘I took
the ground that the government ought to let go of the loan and let
it find its commercial level; that in fact it ought to facilitate an
upward movement in gold in the fall.’
“This reference to ‘its commercial level’ is rich, coming from the head
center of the plotters who wanted to put the article up to 200.
“About the time the above events were transpiring, the Assistant
Secretary of the Treasury, Mr. H. H. VanDyck, resigned his office in
this city. Mr. Gould’s chief ambition was to name his successor in
order that he might be able to control the treasury when the time to
get a corner in gold should be ripe. Mr. Abel R. Corbin came in quite
handy at this juncture to help to further the designs of Mr. Gould.
He was a man of fair education and considerable experience both in
business and politics. He had been a lobbyist in Washington for some
years. He was well informed on financial matters, a pretty good writer,
and could talk like a book. His wife was a sister of Mrs. Grant and
he had good opportunities for reaching the presidential ear, which he
employed to the best advantage.
“A gentleman named Robert B. Catherwood, who was married to a
step-daughter of Mr. Corbin, was approached by Gould and Corbin on the
subject of the Assistant Treasurership. They were anxious that Mr.
Catherwood should take the office and told him that he would make a
great deal of money in a perfectly legitimate manner if he were once
installed.
“So Mr. Catherwood stated in his testimony before the investigating
committee, but he adds: ‘My ideas differed from theirs in what
constituted a legitimate manner and I declined the office.’
“The office then sought another man in the person of Gen. Daniel
Butterfield. He received the intimation of his appointment in a very
different spirit from Mr. Catherwood, showing that he was fully equal
to the occasion. He wrote a letter to Mr. Corbin, thanking him kindly
for the offer, saying that he was under numerous obligations to him,
and expressing a hope that he would be eminently successful in his
undertaking. Gen. Butterfield received his commission in due course.
“Corbin talked with Grant until he received a positive assurance that
Boutwell was not to sell any more gold. At a meeting in Grant’s house,
where Gould and Corbin were present, the President said: ‘Boutwell gave
an order to sell gold, and I heard of it and countermanded the order.’
“It was not until Gould had received positive assurance from the
President’s own lips, that he considered his scheme perfect. But the
links of this strategic chain were now nearly all forged. The bankers
and merchants were largely in his favor through commercial necessity,
the Sub-Treasury was ‘fixed,’ as he thought, and the executive fiat
had placed the Treasury of the United States itself where it could not
spoil the deal if Grant did not change his mind. There were reasons,
of course, to apprehend that he would do so in case of an emergency;
for he never was privy to the scheme, no matter what his traducers and
political enemies may have said.
“To insure perfect safety, then, Grant must be put out of the way
temporarily. This was the crowning effort of the conspirators. After
the Boston Peace Jubilee, this Cabal spent the remaining part of the
summer in maturing its designs.
“It seemed necessary that all the members of the Cabal should be fully
acquainted with the combination to Grant’s purposes as regarded his
orders to Boutwell, and that his ideas should remain fixed on the
theory of increasing exportation for the country’s safety. Accordingly,
it was arranged that Jim Fisk should visit the President at Newport,
where he was on a visit, some time about the middle of August, a month
or so prior to Black Friday. It would seem that Grant at this date was
still wavering and adhering to his policy of selling gold, in spite of
the order which he had given Boutwell. He may have been suspecting that
the anxiety of Gould, Corbin & Co. for the prosperity of the country
was not altogether genuine. The necessity of bringing further pressure
to bear upon him was, therefore, clearly manifest.
“Referring to the interview at Newport, Fisk said: ‘I think it was
some time in August that General Grant started to go to Newport. I
then went down to see him. I had seen him before, but not feeling as
thoroughly acquainted as I desired for this purpose, I took a letter
of introduction from Mr. Gould, in which it was stated that there were
three hundred sail of vessels then on the Mediterranean, from the
Black Sea, with grain to supply the Liverpool market. Gold was then
about thirty-four. If it continued at that price, we had very little
chance of carrying forward the crop during the fall. I know that we
felt nervous about it. I talked with Gen. Grant on the subject and
endeavored, as far as I could, to convince him that his policy was one
that would only bring destruction on us all. He then asked me when we
should have an interview, and we agreed upon the time. He said: ‘During
that time I will see Mr. Boutwell, or have him there.’
“The President was carefully shadowed after this by the detectives of
the clique, and great care was taken to throw men across his path who
were fluent talkers on the great financial problem of the day, the
absolute necessity of stimulating the export trade and raising the
premium upon gold for that patriotic purpose. In this way, President
Grant began to think that the opinion of almost everybody he talked
with on this subject was on the same side, and must, therefore, be
correct.
“About the first of September, it was considered that the opinions of
the President had been worked up fairly to the sticking point, and
Gould bought $1,500,000 in gold at 132½ for Corbin. Gould, however,
was timid in his purchasing at first, as he had heard that a number
of operators who were short of gold were making arrangements to give
Secretary Boutwell a dinner. On further assurance from Corbin that the
President had written Boutwell to sell no gold without consulting him,
Gould prepared to go ahead with the execution of his great scheme.
Nothing remained to be done in the completion of the plot except to
stow away the President in a place of safety until the financial storm
should blow over.”